The cost of independence: WAS Contracting and Temp Agencies

["MM Deaton" <mmdeaton -at- mmdeaton -dot- com>]

Whether you get to pick an approved provider is obviously up to the client.
I do not work for clients who require me to use a particular agency or
provider. I am an independent business person and contract directly with the
client for the work. The invoice sent in by whomever I designate is the
invoice they have to accept and pay. One of the joys of independence is
setting your own conditions of work. I also do not work on-site; I go
on-site when needed, but I work out of my own office.

The conditions of an independent contractor are always going to vary, but I
think someone who is seeking to become independent needs to explore all
possible avenues.

eWork not only handles all of the paperwork for you, including sending the
invoice, they also provide a web-based time tracking system to help generate
that invoice. They are not the accountants, however. You still have to keep
track of your income and expenses. I have used QuickBooks in the past when I
did subcontracting, but I using Money, now. QuickBooks also offers simple
web-based service for a monthly fee.

And the rate of 12% is for 1099 services. W2 services, where benefits are
offered, are more expensive because you get more. There are also higher cost
services for 1099s that offer more than the bare minimum. Most agencies I am
aware of in the Seattle area provide health insurance for their employees,
often 100% of the coverage after certain hours worked. That obviously can
differ widely. I have coverage through my spouse, so that is that a big
issue for me.

One of the reasons I do not use agencies is because they typically mark up
their fee by 60% or more and if the client pushes back on the markup margin,
the push on you, the contractor, to lower your rate. Not me, sister! I can
charge the client a lower hourly rate than if they go to an agency and still
more than cover my expenses with a healthy paycheck to myself every week.

And my house went through a major earthquake on February 28, but it does not
change my mind about wanting to protect it against money-grubbing lawyers!

Mary Deaton
Deaton Information Design
News and opinion at: http://www.mmdeaton.com

-----Original Message-----
From: bounce-techwr-l-67915 -at- lists -dot- raycomm -dot- com
[mailto:bounce-techwr-l-67915 -at- lists -dot- raycomm -dot- com]On Behalf Of Berk/Devlin
Sent: Monday, May 07, 2001 10:57 AM
To: TECHWR-L
Subject: RE: Contracting and Temp Agencies


At 09:58 AM 5/7/01 -0700, MM Deaton wrote:
>FYI my previous post on this issue, eWork (http://www.ework.com) charges
12%
>of revenue to provide 1099 payroll service for independents. Believe me, at
>$50 an hour, this fee more than covers the lost billing hours if you do all
>of this yourself.

I don't agree that it "more than covers" anything.

In all my approved provider-mediated jobs:
1.  I still had to create and submit an invoice and, since I was the one
on-site, had to make sure it was signed and routed properly;
2.  I still used and paid an accountant to process my taxes and other
assorted paperwork;
3.  There was some occasional unpleasantness, often occurring toward the
end of or after  my tenure at any particular client, having to do with
getting some invoice paid.  The approved providers did not spearhead this
effort.

I charge significantly more than $50 per hour.  Any approved provider who
takes 15% of my rate, given the minimal amount of work the approved
provider does for me, is truly a highway robber.

Also, contrary to what Mary implies, you often don't get to PICK your
approved provider.  That's why they are an approved provider :-(  Approved
by your potential client, that is.  If you are lucky, you get a list from
your client.  Otherwise, you are handed the name and email address of a
single approved provider.  You don't wanna go with that provider?  No
problem, take a job elsewhere.

>They will also provide W2 (employer-of-record) services where you are paid
>an hourly rate and they pick up the employer side of taxes, offer benefits,
>and so on.

Not benefits, usually not for only 15%.  You would pay extra for that
insurance.  And if you take a w-2 with someone else's company, you lose ALL
tax benefits of being self-employed.  With insurance costing at least $100
per month with a huge deductible, not being self-employed (getting a w-2)
costs you a bundle.

>But as someone mentioned, you can get decent group rates on health
>insurance from a variety of organizations.
And, if you are self-employed is 100% tax-deductible before salary as would
be medical expenses.

>I disagree about getting liability/umbrella insurance. I would hate to lose
>my house because I am "certain" no client would ever sue me. It is a small
>price to pay for the certainly I would be covered.
Guess you don't live in CA or on a flood plain or where there are
tornadoes.  Staying alive and more-or-less whole is a continuous process of
choosing your risks.  Nothing's certain but death and taxes.

--Emily

~~~~~~~




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